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Aames Investment Corporation Reports Fourth Quarter Financial Results and Updates on Corporate Changes
Company to Convert to C Corp. Status Through Corporate Restructuring and Creation of Captive REIT
Wholesale Cost Reductions Begun with Closure of 2 Centers and Elimination of 100 Positions
Core EPS for the Quarter of $0.02, GAAP EPS Loss of $0.07
Los Angeles, California, March 27, 2006 Aames Investment Corporation (NYSE: AIC), a nationwide subprime mortgage lender today announced full financial results for the fourth quarter of 2005 and provided an update on recently announced corporate changes. Diluted core EPS for the quarter equaled $0.02, while diluted net loss per common share for the December 2005 quarter equaled $0.07 on a GAAP basis. During the quarter, the Company recorded a pretax mark-to-market derivative loss under FASB 133 of $5.3 million, representing a diluted non-core loss per share of $0.09.
Fourth Quarter 2005 Highlights
Net cost to originate of 1.75%, compared to 2.08% in the September 2005 quarter;
Total loan production of $1.9 billion, with the Retail Channel accounting for 43% of total;
Taxable portfolio net interest margin of 2.75%;
Weighted average interest rate of 7.81% on the quarters production, up 40 basis points from the third quarter of 2005.
Mr. A. Jay Meyerson, Chairman and CEO of Aames, commented, The fourth quarter results highlight our commitment to improving our efficiency, further growing our retail originations and to increasing the coupons on our loan production. We were pleased to achieve a 1.75% net cost to originate ratio, well below where we started the year, and to have our retail channel contribute over 40% of total production. We also made progress during the quarter in raising rates on our production, a trend that continues in the first quarter of 2006. Notwithstanding these improvements, the mortgage banking business faced a sustained challenge to sell loans at a profitable level in the fourth quarter. While whole loan sale pricing decreased across the board during the quarter, prices paid for second lien and selected other loans in particular decreased quickly and impacted our net gain rate. We remain cautious regarding whole loan sales premiums moving into early 2006, and will focus on making significant reductions in our cost to originate ratio in response to this outlook.
The following information was filed by Aames Investment Corp on Tuesday, March 28, 2006 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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